Lam Research Beats on AI-Led Equipment Demand, Guides Higher

Lam Research reported fiscal second-quarter results that topped Wall Street expectations, lifted by a surge in orders for wafer fabrication equipment tied to artificial intelligence chips. Revenue came in at $4.8 billion, above the company's own forecast range, while adjusted earnings per share hit $10.45, the company said Wednesday.

Chief Executive Tim Archer told analysts on the call that demand from leading-edge logic and memory customers remains "exceptionally strong," driven by the buildout of AI infrastructure. The company's installed-base business also grew, as chipmakers increased spending on maintenance and upgrades for existing tools.

The core metric that shifted the investment case was gross margin. Lam reported gross margin of 48.2%, up from 46.8% a year ago, reflecting higher volume and better mix toward advanced nodes. The company guided for current-quarter revenue of $5.1 billion at the midpoint, above the consensus estimate of $4.9 billion, according to data compiled by Bloomberg.

Wall Street focused on the guidance raise. Several analysts lifted their price targets after the print, with Goldman Sachs calling Lam a "direct beneficiary of the AI capex cycle." The stock rose 4.3% in after-hours trading.

Lam's Alpha Score stands at 62 out of 100, placing it in the Moderate category. The score reflects the company's solid earnings momentum offset by valuation that has already priced in much of the near-term upside.

For the broader semiconductor equipment sector, the report reinforces a pattern seen at rivals Applied Materials and Tokyo Electron: AI demand is offsetting weakness in automotive and industrial chips. Lam's memory business, which accounts for roughly 40% of sales, showed particular strength as DRAM makers converted capacity to high-bandwidth memory used in AI accelerators.

NVIDIA, the largest buyer of the advanced packaging equipment Lam supplies, reported its own earnings last week that showed data center revenue tripling. The connection between the two companies is tightening as chip architectures grow more complex. NVIDIA's Alpha Score of 68 also sits in Moderate territory, with the stock down 2.24% on the day.

Lam said it expects capital spending from its top five customers to increase by mid-teens percentages in calendar 2025, a signal that the equipment cycle has further to run. The company's China revenue exposure remained elevated at 38% of total sales, though Archer noted that export controls have not materially disrupted shipments to non-restricted entities.

Investors will watch the company's March quarter earnings report, scheduled for April 23, for signs that the AI-driven order pace is sustainable. For now, the print confirms that Lam is capturing a disproportionate share of the spending wave tied to the shift toward more complex chip designs.